Rely on Customers and Prospects to Identify Needs, Test Solutions and Conceptualize Products

Posted on December 1, 2011 by Ira Michael Blonder

Roughly speaking, Independent Software Vendors (ISVs), systems integration firms, and technology consultants can go one of two ways as they proceed down the path of new product design:

Build the product and then find out if anyone needs it, or
Communicate with customers, prospects, competitors and representative groups within a market to discuss areas of need that can be addressed by products and/or services within the range of company skills and production capabilities

In my estimation, option 1 is practiced far more often than option 2, usually as the result of an assumption on the part of an entrepeneur that option 1 represents the easier and faster approach. In my experience, however, products produced by the option 1 method generally fail. The fact is that it is next to impossible to extrapolate from an individual notion to an accurate estimation of a pervasive market need.

Rather, strict application of the option 2 method, which starts with zero assumptions, whatsoever, about solutions, market needs, etc, is a much more reliable and ultimately less costly approach to product development. After all, walking away (before any product development costs have been incurred) from an assumed marketplace that is found to be non existent, is certainly the right course of action.

Option 2 is easy to implement through a teleprospecting function. Prospects and customers will be much more willing to participate in telephone conversations that are not encumbered with sales offers and product presentations. In fact, some contacts who are involved with marketplace topics will be eager to share information with a skillful teleprospector.

The teleprospecting program should be crafted to not only gauge product needs, but also, and of most importance, the level of clarity with which prospects and customers perceive these same needs. It is especially important to make some estimate of marketplace clarity in order to accurately forecast the length of any sales cycle as well as the actual timing for product development. After all, it makes no sense to develop products for an immature or “broken” market. Better to work closely with prospects and customers to clarify needs. Once needs are clear, then products and services can be recommended as solutions for needs.

Presently in the winter of 2011, many technology marketplace needs lack clarity. Compounded failures to deliver value, false promises of amorphous value, together with underestimation of what it takes to deliver Business Process Re engineering (BPR) have rendered many a technical marketplace into a “no man’s land” which ought to be avoided.

Better take surveys than dream up products for enterprise business 2012.

Wrong Turn at the Roundabout: Let’s Design It, After all the Customer doesn’t always know what she needs

Posted on November 15, 2011 by Ira Michael Blonder

Deborah Gage of The Wall Street Journal (http://www NULL.wsj NULL.com) published an article on the 2011 rationale for software companies to make the dubious effort of building enterprise “solutions without a problem” — FASTech: Businesses Need Smarter Software, Whether They Know It Or Not (http://blogs NULL.wsj NULL.com/venturecapital/2011/11/08/fastech-businesses-need-smarter-software-whether-they-know-it-or-not/).

Here’s the story line: [Software ISV VP of Sales] “We’ve gone down the path of the complex sale and yes, we fully agree with Jeff Thull (http://www NULL.primeresource NULL.com/) that lots of these deals end up in a “dry run” (to use Jeff Thull’s method of referring to sales that, for one reason or another, never happen). In fact, we find that when the customer reaches the conclusion that she doesn’t truly know what she’s looking for, or that the systems are not in place within her enterprise to support the implementation of ABC solution; that she will not buy our product.”

Here’s the punch line: [Software ISV VP of Sales, with VP of Product Marketing at his side] “Therefore, we decided to build a version of the product anyways. After all, who knows where the market will go next. Our [half baked] solution might be just the ticket next year.” This decision to build the product anyways ends up costing ISV buckets of money and lots of development time that would be better spent working on useful solutions that customers will ultimately ask for once the dust settles and thoughts coalesce into workable requirements.

Our C level managers of sales and product marketing have made a wrong turn at the roundabout. What they ought to have done, as Jeff Thull makes very clear, is to dropped the sales plan to book the order this year, but make the marketing commitment to partner with the customer through the potentially lengthy process of identifying flawed decisions, assumptions and plans, renovating same and, finally, planning for a reasonable, workable solution that our ISV will end up building for the customer. After all, in all likelihood few, if any competitors of our ISV will be willing to partner with the customer to work this process through to a successful conclusion.

Bottom line: Customer driven product management still makes the only sense for innovative businesses with high expectations about market penetration. Wasting time building gadget software will not pay off over the long haul. Worse yet, decisions to build gadgets are indicative of a lack of patience with markets, the kind of character flaw that can threaten to deep six the best of plans.

Pick Market Niches with Great Care — Ready Fire Aim Won’t Work for Market Niche Decisions

Posted on November 14, 2011 by Ira Michael Blonder

Building markets on monies spent, but for solutions that are under utilized, is a problematic endeavor. Consider that 1) the big purchases have already been made and 2) that the solution purchased has not proved to be popular.

Consider the enterprise business market for social collaboration software. This market includes products like Microsoft® SharePoint® and IBM® Lotus Notes. Traditionally purchases of SharePoint and Notes have been plagued by low levels of user adoption within the enterprise. Answering “why” adoption rates are low has proven to be a risky endeavor as research power houses like Forrester Research (http://www NULL.forrester NULL.com) are at a loss to explain clearly a pervasive reason for low adoption rates. Rather, Forrester and others contend that low adoption rates are the result of a combination of factors, including low levels of “user friendliness” in the features of SharePoint and Notes as well as a tendency to push users into re-engineering daily business processes.

Business Process Re-engineering (BPR) is neither a trivial thing to achieve, nor an area where most consulting firms ought to venture to find new business. Sales cycles are very long. As well, the typical BPR solution requires the buy-in of multiple silos from within the enterprise; for example, for banking and finance, Audit, Compliance and MIS/IT may all have to endorse the same solution before an order will be placed. Building consensus among these three powerful organizations can literally be a multi year effort that will prove expensive, not only with regards to the amount of time required to pull off the deal, but, perhaps, in terms of additional parties who may have to be added to the sales team (for example, an ex CEO or other key influencer who can persuade all three groups to endorse the solution) at a costly price.

If major BPR is required to resuscitate the fortunes of Notes, or SharePoint within a business, then why go there? Rather, as I see it, a better case for building a niche upon a purchase already made is to demonstrate how SharePoint or Notes can be applied to an additional need, one that is compelling, but not addressed properly within the enterprise. Once again, turning to banking and finance, the need for constant compliance reporting across this highly regulated industry will provide a greater driver for an attractive market niche with a substantially attractive value proposition. Just compare the cost of using something already purchased, for example SharePoint, for compliance reporting vs the cost of licensing IBM OpenPages. No brainer?

Sell Broadly through Partners, Channel Resellers, White Box Manufacturers, and Direct — or Die

Posted on November 12, 2011 by Ira Michael Blonder

Strong words but true. Consider how the big boys do it. Here’s an excerpt from Cisco’s Annual Report filed with the US SEC, dated September 14, 2011: “A substantial portion of our products and services is sold through our channel partners, and the remainder is sold through direct sales. Our channel partners include systems integrators, service providers, other resellers, distributors, and retail partners.” (quoted from Cisco Systems Annual Report, 2011 (http://investor NULL.cisco NULL.com/secfiling NULL.cfm?filingID=1193125-11-247394)). Further, here’s Cisco on Alliances: “We pursue strategic alliances with other companies in areas where collaboration can produce industry advancement and acceleration of new markets.” (quoted from Cisco Systems Annual Report, 2011 (http://investor NULL.cisco NULL.com/secfiling NULL.cfm?filingID=1193125-11-247394)).

Dissect the meaning of “acceleration of new markets.” Strategic alliances (joint marketing deals) make sense for this business where striking an alliance with a complementary product can hasten Cisco’s entry into markets where they have little share, if any, of sales. In other words, Cisco uses alliances to widen the throat of the product “bottle”, to increase the velocity of sales, or else, Cisco does not pursue alliances. Handy dictum. But alliances have another value to Cisco, they can “produce industry advancement.”

The mysterious process of advancing industry that Cisco notes, to my mind, results in a better alignment of technology with palpable market needs. This industry advance sweeps away every “solution without a problem” within its reach, ensuring that products are not engineering-heavy and marketing-light. In part, then, Cisco chooses to use strategic alliances to keep its feet on the ground. Good idea for a company that has floated away several times on products light on marketing and heavy on engineering.

Product innovators should closely follow the above guidelines regardless of the present size of a business. Uniformly progressing in each of the areas just noted in the marketing plan and, further, as sales strategies are defined, ensures an optimum opportunity for success. Further, this approach affords a legitimate and convincing rationale for never, ever, agreeing to exclusivity with any particular participant in any one of these market verticals (meaning direct national sales, channel resellers or strategic partners). Rather each and every alliance and partnership should be a non exclusive activity. Closer association and, potentially, exclusivity may arise at some future time, but better to have such exclusivity arise through achieving or, better yet, exceeding revenue objectives than to enforce it prematurely.

You can be sure that there is a reason why very large successful businesses like Cisco opt for a multi lane highway when they put the bus on the road. Understanding that rationale and adopting it for one’s own approach can represent a big step towards success.

Leverage Channel Partnerships Fairly Maintaining Non Exclusive Relations Where Possible

Posted on November 9, 2011 by Ira Michael Blonder

Product marketing plans for products and/or services targeted for channel distribution must include safeguards against the possibility of granting exclusivity to specific partners. The trick here is to proceed carefully and in such a manner that exclusivity is never presumed, implied or ever delivered.

Typical channel distribution prospects are familiar with negotiations based on non exclusive rights to sell products and, in most cases, there is no problem navigating through these negotiations to a successful conclusion for all parties. But much responsibility rests on the shoulders of the manufacturer or ISV to maximize the benefit of channel partnerships framed on a non exclusive basis. Indeed, “more the merrier” ought to be the underlying objective of all of these campaigns. The key driver is revenue; therefore, the more sales personnel selling the product for you, the better.

Consider the downside of granting exclusivity to specific partners: revenue potential tops out at:

The outer limits of geographical reach for the channel prospect
The maximum revenue potential represented by the size of the vertical market size serviced by your channel prospect, and, of most importance
The channel partner’s reputation at any given moment in time

Better not to go there.

Better, as well to nest your channel strategy (built on a resolution to maintain non exclusive affiliations with partners) within a greater marketing pan that augments channel revenue with a direct national sales effort and a white box syndication effort. Marketing management should play the role of ambassador to the market, spending quality time with any/all partners to indoctrinate them to the plan.

As well, marketing management should present the broad product value proposition directly to the marketplace. This effort will be particularly useful for partners as it will provide the wind to their sails, lowering the burden that would otherwise fall on them to magnetize the market for the product.

A comprehensive plan as I’ve just sketched can take an emerging business very far along with regard to attaining critical “escape velocity” to power into revenue positive territory. Of course, cash positive will also spell that much more benefit for the business, not to mention providing the fuel needed to expand programs and, potentially help management decide when it makes sense to eschew under the radar marketing for something more palpable.

Nevertheless, the final decision about whether or not it makes sense to switch from covert to overt marketing shouldn’t be made just upon revenue levels. More of that in another post.

Don’t confuse Technical Babble with Technical Marketing Communications

Posted on November 5, 2011 by Ira Michael Blonder

Marketing under the radar is a recommended approach for businesses with technical innovations that meet a range of criteria, as I have already written in previous posts to this blog. But marketing under the radar as the result of written communications materials that fail to inform prospects in meaningful terms is not a recommended approach for any business, least of all businesses that offer innovative technology products and services.

Consider the following sentence: “[ABC Product] is an intuitive user interface for your knowledge workers to interact with your processes, related content and supporting business systems. It is designed to maximise user productivity and adoption.” (quoted from http://www.ovaflo.net) What does this sentence mean? Who decided that the “user interface” is “intuitive”? Why? Precisely who are the “knowledge workers”? What are the “processes” to which the copywriter has alluded? Finally, what are the “business systems?” This sentence communicates little useful information, if any to the website visitor. With little information communicated to average people, the only hope is that highly technical individuals within enterprise business will somehow understand what the product is about, and be able to act upon some need that they have with a purchase.

But, more often than not, so-called “C” level contacts within an enterprise, for example a CIO (Chief Information Officer) or a CTO (Chief Technical Officer), or in the case of Ovaflo, a CCO (Chief Compliance Officer) are much more the average people type. These “C” level contacts control the budgets that fund purchases for products like the one described above. Therefore, it is always recommended to address marketing communications materials to an average level reader.

Delving deeper into Ovaflo’s website, further examples of entirely opaque phraseology include constructs like “Supports authentication of user credentials across multiple directory forests and domains” (http://www.ovaflo.net/featuresbenefits_features.html). What is a “directory forest”?

How best to avoid written communication that fails to communicate? Look to sales and marketing staff to draft marketing communications if a marketing communications manager is not available. Further, test written materials on prospects, customers, or average type colleagues prior to publication. Finally, get to the bottom of the benefit that your product or service delivers to customers and make that the core of your communications effort.

It seems to me that Ovaflo’s real contribution to customers is that it provides customers with software for managing all aspects of using forms within any highly regulated business, but then again, I’m not sure

Planning for the effects of Interactive Media on Marketing & Sales for New Products & Services

Posted on November 3, 2011 by Ira Michael Blonder

As I have written elsewhere and Jeff Thull has treated at length in his book “Mastering the Complex Sale” (John Wiley & Sons; 2010; ISBN 978-0-470-53311-6), interactive media inculcate enterprise prospects with the idea that any product or service is, effectively, no more than a commodity. Promote your product or service online and get ready for inquiries (if you manage to optimize your online presentation) based solely on price and availability. But interactive media are not going away any time soon; therefore astute marketers need to plan for the effects as they formulate strategies that will fend off efforts to treat unique solutions as commodities.

My bet is that the evolution of the marketplace into an electronic, interactive “skin” is still a work in progress. This evolution has wreaked most havoc on the news industry which finds itself caught in a Catch 22, grappling with whether to peddle subscriptions or feed off of the comparatively meager revenues from online display advertising. Lots of the downside is now readily apparent for that market vertical, but, as the case with any type of evolution, there will be an upside realized by some news publishers that has yet to be captured, studied, digested and regurgitated by astute marketers. So part of my point is to urge that product managers for innovative offerings maintain a “stay tuned” posture, observing sales and marketing efforts at the cutting edge of the convergence of business with interactive media (for example with regard to online news publications) to catch what works as close to the moment of success as possible.

The other part of my point is to continue to play in the space. Use interactive media to its best advantage. For me, I find LinkedIn (http://www NULL.linkedin NULL.com) to be a rich and powerful collection of contacts for myself and for the product and service offerings of my clients. As well, I am keen on Google+ (http://plus NULL.google NULL.com) which provides, through its huddle feature a highly useful means of engaging with multiple contacts simultaneous via a video call.

Nevertheless, never lose sight of the danger of morphing play into a truly dangerous activity where telephone contact with prospects is eschewed; all communication must be done online; and, you find yourself writing emails to prospects instructing them that “when you buy it” just add it to a shopping cart”. Spiralling downward along these lines will truly leave you with no more than a commodity and, in all likelihood, few customers for your enterprise product or service.

Changing the Wheels on the Bus at 60 MPH Maybe Dangerous–Better Park and Take Your Time

Posted on October 30, 2011 by Ira Michael Blonder

In June of 2011 Forbes Magazine published a short article by Bill Fischer on the Forbes.com website: Ready, Fire, Aim! (http://www NULL.forbes NULL.com/sites/billfischer/2011/06/03/ready-fire-aim/). Bill notes a familiar malady that infects many entrepeneurs starting new businesses, namely, a near compulsion to “move fast, seize the opportunity and even learn by failing“.

It is worth noting that Stanford University School of Business, in 2006, introduced the same concept of a unique and dubious connection between
startups and impatience, but with a suggested remedy in a research project completed by Mark Leslie & Charles Holloway titled The Sales Learning Curve (http://www NULL.gsb NULL.stanford NULL.edu/news/research/stratman_leslie-holloway_slc NULL.shtml).

I’m personally familiar with this malady, having worked with CEOs who’ve tried to use this approach to literally re-architect products “on the fly” based upon responses received from prospects and customers. Sad to say, I’ve rarely seen this type of strategy work. Sure, listening to prospects and customers makes sense. Nevertheless, the best time to listen is prior to going to market. The safety of operating under the radar, before products have been presented to the market, provides the time required to get products right, not to mention the time to carefully put together a marketing plan, if not a complete business plan. Skipping these steps can prove to be a catastrophic error.

The most common excuse that I’ve heard for utilizing Bill Fischer’s “Ready, Fire, Aim” approach is that a business is under capitalized. When this excuse is coupled with a CEO’s intention to retain full ownership of the business without recourse to outside investors (who, presumably, will want too big a piece of the pie) a spell binding mirage appears on the horizon, which, if left to captivate, can lead the fixated captain of the ship right over a cliff.

Consider, for example, the negative impact of selling hardware devices that are still in development as finished products. Certainly sales revenue is attractive, but at what cost? One client of mine developed a strategy nicknamed “ROM a day,” This “ROM a day” regime, basically a regular process of mailing out processors with bug fixes along with installation instructions directly to customers, did NOT keep the “doctor away.” Fact was that the bugs had been identified by the very same customers who were now being asked to embark, in some cases, for a third or fourth time on a remedy that still might not work. The engineering changes were made too quickly, in complete reactive mode. No one had thought out the big picture, nor had anyone noted the danger of using paying customers as little more than alpha testers without their permission.

The sobering effect of “ROM a day” was the loss of important customers who otherwise promised rich revenue streams. Further the reputation of this customer’s business was tarnished by public comments from these important customers who wielded considerable influence in their markets.

I always counsel to undertake any proof of concept activity from a position that is under the radar of the broad market. As far as revenue requirements go, better line up the funding you need before you go forward or else risk destroying the most important and promising prospects through your renovation process.

Build Highly Successful Products to Deliver Palpable, Clear Cost Savings and Win Big

Posted on August 21, 2011 by Ira Michael Blonder

Jeff Thull, in his book “Mastering the Complex Sale” (http://www NULL.masteringthecomplexsale NULL.com/) makes a strong case for delivering tangible, observable cost savings to customers as the foundation for successful complex selling to enterprise business customers. I agree completely with Mr. Thull’s point. In fact, I see clearly how products targeted to markets that require complex selling efforts should be designed entirely around cost savings. If you cannot deliver tangible cost savings to a customer with a conceptual product, then don’t waste your time.

Using this rule of thumb, that products must deliver tangible cost savings to justify a purchase at some planned price (I’ve italicized the word “some” to convey the importance of flexibly approaching the task of pricing products in a ratio to cost that delivers persuasive savings to customers to successfully build a market) or else move on to a better idea, it is easy to see why solutions like online website development have disintegrated into low price/low value offerings. After all, isn’t the market message for online website development some version of “everyone else has a website, why not you”? Where is the value proposition in this rationale? Where is the presentation of clear, measured cost savings for the customer? How different and how much more persuasive would be a market message that details the cost savings packed into an online store versus the expense represented by a brick and mortar store! Sadly, this type of cost savings centric market message is generally absent from the online website development marketplace.

Designing products to deliver measurable cost savings ensures maximum return on investment from selling efforts. After all, sales of these products should deliver long term relationships with satisfied customers, just the type of business that most business ought to crave. If you opt to follow this approach, then be fully prepared to truly deliver savings via your early customer engagements or else relegate your market message to the trash can. Therefore, delivery and after sales support must be completely aligned with marketing & sales to deliver success. Complete alignment means understanding the cost savings for the customer and taking whatever steps are necessary to deliver those savings in each and every engagement.

In the world of the complex sale, there are no purchases made without saving capturing some substantial saving against costs that would otherwise have to be incurred by the business. This is especially true for businesses in highly regulated industries where costs can result from improper policies and procedures. It is remarkable how open prospects with “external drivers” (meaning unfavorable regulatory reviews) are to discuss these drivers and to communicate the costs that they need to save. Successful marketers to highly regulated industries learn quickly to collect as much detail about these “external drivers” as they can to construct their custom, individualized presentation of tangible value to prospects. Don’t fail to do the same.

Use Just a Pinch of Commodity Sell to Rev Up Direct Marketing for Products Still Under the Radar

Posted on July 31, 2011 by Ira Michael Blonder

The “commodity sell” is, generally, anathema for the complex sale. Nevertheless, for clients of mine with products that operate “under the radar,” just a bit of “commodity sell” does the trick to drive the performance of direct marketing (essentially a combination of telemarketing, teleprospecting, and webinars) as a driver for the complex sale.

If contacts at enterprise size business prospects know nothing about your product, and little about your niche (regardless of its strategic importance) there is no other option than to include a presentation of what you offer within your early conversations with the prospect. This presentation provides just the “pinch” of commodity sell to spark contact interest in furthering conversations and, thereby, the gathering of information that you must do to qualify just who this contact is and what he/she does relative to important related projects and plans (or the lack thereof) at your enterprise business prospect.

It is absolutely essential that the information that you convey via the presentation be completely consistent with any subsequent information your sales team may communicate to the specific contact as well as any other contacts at the prospect. Understand that your product is still under the radar of the marketplace; therefore, the information constitutes the only branding that you possess. Whenever the information changes, then your brand changes and, therefore, the power of repetition along with the development of subliminal associations is substantially diminished. Keep the presentation consistent, better yet, require that any and all references to features, benefits, value proposition, etc make refernce to the same uniform information.

The importance of this point is doubly critical if your product is an integrated solution. Permitting communication of ambiguous information abvout an integrated solution provides the prospect with an opportunity to break up your solution into components. This opportunity spells doom for the complex sale and lots of revenue will be left on the table. I have worked with clients with this problem who saw projected revenue growth delayed by six months, and longer, as planned complex sales trended into commodity sales of components with dangerously lower pricing to customers.

If you opt for a direct marketing approach to product promotion and lead generation then do consider a hybrid method that includes a highly controlled and consistent presentation to contacts. Review any/all printed and electronic collateral to ensure that information is completely consistent. Revise as required or risk diluting your potential for complex sales, not to mention precious revenue.

Marketing, Promotion & Sales Consulting for Business

IMB Enterprises, Inc., Huntington, NY 11746 +1 (631) 673-2929, imblonder@imbenterprises.com

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